When We Solve the Firm's Dual Production Problem (I

question 174

Multiple Choice

When we solve the firm's dual production problem (i.e., maximize output subject to a cost constraint) by the method of Lagrange multipliers, the optimal value of the Lagrange multiplier equals the:

• A) marginal product per unit cost of each variable input.
• B) marginal product of capital.
• C) marginal product of labor.
• D) marginal cost of production.

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Definitions:

Price Takers

Parties in a market who accept prevailing prices because they have no power to influence the market price due to their small scale of operations or the competitive nature of the market.

Capital Gains

The amount by which the sale price of a security exceeds the purchase price.

Systematic Risk

The risk inherent to the entire market or market segment that cannot be mitigated through diversification.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to quantify the risk of investment returns.